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Oil leak was transmission leak?

2001 Legacy Outback AWD manual transmission 145,000 miles 2.5 engine. Four weeks ago, the oil change people noticed oil had dripped over the exhaust parts under the engine, and blown back along the chassis. We had just returned from a 600 mile trip on the interstate. My wife then told me she thought she had smelled something. Took to dealer to fix oil leak. They replaced all gaskets - head, valve cover, intake, exhaust. Very expensive, but I thought an investment becouse it was working fine except for that, and took advangtage to replace water pump and timing belt.
Seemed to work fine for a couple of weeks with short trips around town, then went on another 600 mile trip. At first rest stop found dripping oil amd smoke coming from the exhaust parts under the engine. Checked engine oil. It was fine, so decided to keep going. Stayed at destination, with little problem for short trips, then drove back, still with plenty of oil in engine, maybe down 1/2 quart if any. Problem again on way back, dripping oil and smokey exhaust parts under rear of engine.
Got home OK, but tried to drive it to the dealer today. Had some trouble shifting, then all four wheels siezed up. AAA did a nice job getting it on and off the flatbed. The dealer hasn't put it up on the rack yet, but did check the tranmission fluid. None. So they are saying I probably had a transmission leak. I'm thinking that that was the problem in the first place, but they didn't catch it. They have started to suggest it was a new problem. Comments, suggestions? I am obviously someone who likes to keep nice cars running, but I'm thinking that this is the end of the line.

outdoor,
I feel your pain and I think you realize that you are between a rock and a hard place. You did what you were supposed to do, and the dealership did not, and now it appears that they are trying to crawl out from their responsibility.

I was in a similar situation with a Toyota Cressida years ago. Rather than blow my cork and lose everything, I wrote a firm but polite letter to Toyota Canada explaining the situation, and suggesting that I would be replacing the car in the next 2 years, and that their attention to this matter would help me choose whether to buy another Toyota or change over to a similar model of Nissan. Two weeks later I had a call from my dealer to ask if I could bring the car in to repair the problem free of charge. I did, and we have been loyal Lexus owners since that day (had to go up to a Lexus ES as the Cressida was no longer being made).

I has a similar experience with GM over a problem with a Corvette I had bought new, just after the warranty had expired. A similar letter to GM Canada got me the parts for free but I had to pay for the labour. At the time, although not completely satisfied with the results, it was far better than having to pay for the entire repair. (I've never owned another GM since).

My point is stay pleasant but firm, write some letters, and maybe this will work out as you would hope. If not, then its time to switch dealerships and give the old one all kinds of free advertising and all of it bad. Good Luck!

Dumb question maybe, but isn't that a heck of a lot of fluid to drip out onto your exhaust and drain the tranny fluid completely to not notice it sooner? I've had oil leak onto my exhaust, and it stunk bad, and that wasn't even a lot, just dripping.

What I'm getting at is that isn't it fair to assume that when they did all the engine work the first time around, maybe they drained the tranny and forgot to fill it?

you went in for a slight "oil leak" and got billed for a massive head gasket job that didnt' fix the problem? there's a problem with that.

you should have never had the head gaskets replaced in the first place. but let's ignore the head gaskets for now:

here's the problem with the oil leak: you should have received a diagnosis. did you?

almost EVERY SINGLE car on the road has some slight oil seapage or leak, very normal. sucks if it happens to drip on the exhaust. a proper repair involves locating the leak (very easy... i mean it's LEAKING!!! :lol:).

throwing a complete engine reseal (what you paid for) at an oil leak is absolutely insane, nobody does that. you might as well buy a new engine every time something is wrong. which either means we don't know everything (there were other problems) or they hosed you.

FYI: your year engine doesn't leak oil at the headgaskets, good running EJ engines don't do that. so that they even replaced the head gaskets sounds like overkill. and that's a $1,000-$,1500 overkill on your bill. head gaskets are expensive.

I feel your pain, outdoor. If I were you I would contact SOA (Subaru Of America) and ask to talk to the regional rep.

But before that I'd call the dealership and ask for a face-to-face meeting with the highest person there--the General Manager or, preferably, the owner. Explain the situation as you did for us in your first post. Ask him point blank why the actual problem was not discovered and fixed.

Let him/her know you intend to contact SOA but that you'd like to give them a chance to correct the situation first.

You'll never get your money back on the work they did for you (or to you!) but at the very least they need to help get your car back on the road.

Then, if/when the problem gets solved avoid that dealership like the plague--sounds like they are either totally incompetent or totally scam-artists or both,

Thanks for everyone's comments. I will take this up with the management of the dealer and if not satifsifed, SOA. I was on a long planned vacation, and just got back, thus the delay in my answer. The only word I had on my car while I was gone was a short email - no used or rebuilt manual transmissions avaiable, and a new part costs $4500.